How to check your customer is over 18 and still alive
1, 2, 3... clear
By adding less than two seconds to an e-commerce process, website operators can now check the age, identity and vital status of customers against the UK Electoral Roll, BT directory enquiries, a credit reference database and a mortality database.
The new service to reduce card fraud and assist compliance with legal age restrictions comes from payment service provider Metacharge. Working with 192.com it integrates the automated age and identity checking service with payment processing.
It isn't cheap: at £1.50 per query, Metacharge is targeting only the high-risk operators, in particular the online gaming industry. But the London-based company also points out that fraudulent card usage is costing over £1m a day in the UK.
Managing Director Scott Law told OUT-LAW that online gaming "is a magnet for fraud". He said that the fastest growing form of identity theft is not phishing; it is taking the identities of dead people and using them to get credit. So a check against a mortality database tells an offshore internet casino if its latest poker player is a corpse.
"Anyone with age-restricted goods or services or high value items, like consumer electronics, can benefit," said Law. It may also be of interest to banks taking online credit card applications, although Law is focusing on his gaming industry customer base for now.
This customer base has a good opportunity for growth over the next two years.
Currently, it is legal for British residents to bet or gamble online from home. About 800,000 adults do so every month, according to the Department of Culture Media and Sport. It is also legal to run a site in the UK that takes bets for, e.g., horseracing.
However, it is not lawful for a company to run an online casino if its equipment and payment processing are in Britain because the Gaming Act of 1968 requires punters to be present in person where the gaming is taking place. This is set to change.
The law will relax when provisions of the Gambling Act 2005 come into force which introduce a licensing regime for internet casinos based in the UK. It also requires that systems be put in place for internet betting and gaming to ensure that under 18s are excluded. At present, under-18s are not allowed to gamble, but there are no clearly stated requirements for operators to ensure they do not take bets from under-18s.
Many observers believe that UK internet gaming will take off when the law changes, at a date still to be determined but probably not later than September 2007. (Others are doubtful: British companies like Ladbrokes already run legal internet casinos through offshore subsidiaries, so the barriers to market are not insurmountable.)
With Metacharge's Verify Your Customer (VYC) system, merchants can automatically authorise or decline transactions based on the results. They can also set the system to hold a transaction, triggering a manual check. The customer might then be asked to fax a copy of his driving licence and a utility bill.
About two or three customers in 10 will trigger the need for a manual check. But Law points out that before tools like this, all tests were manual, adding much more significant running costs to gaming operations. The VYC system runs a geographic IP address lookup. Law says the accuracy of such checks has improved greatly in recent years. "It used to be that all AOL accounts looked the same, but not any more," he said.
The first six digits of any credit card identify the issuing bank and country. Metacharge's service reports this information to the merchant – together with the country and city submitted by the cardholder and the distance in miles, if any, from his IP address to his street address. Some countries are hotspots for fraud – Law is particularly wary of Nigerian, Malaysian and Thai addresses.
The system also reports the number of chargebacks received from the card in use and from the customer's IP address.
The date of birth of the cardholder is also required – although lies will likely be spotted and the merchant again has the option to accept or decline or hold the transaction.
"Some things are a real giveaway to fraud," said Law, "other things build up a picture and you can very quickly learn to interpret it."
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